Health care gains start soon – bigger ones later

WASHINGTON – The first changes under the new health care law will be easy to see and not long in coming: There’ll be $250 rebate checks for seniors in the Medicare drug coverage gap, and young adults moving from college to work will be able to stay on their parents’ plans until they turn 26.

But the peace of mind the president promised – the antidote for health care insecurity, whether you favored or opposed his overhaul – is still a ways beyond the horizon, starting only in 2014. Insurers then will be barred from turning down people with medical problems, and the government will provide tax credits to help millions of working families buy coverage they can’t afford now.

President Barack Obama plans to sign the main legislation Tuesday in the White House East Room after a bitterly divided House approved it the evening of March 21. That will cap a turbulent, yearlong quest by the president and congressional Democrats to remake the nation’s health care system, fully one-sixth of the U.S. economy.

Obama’s signature will start the Senate considering a package of changes the House also has approved. But the main overhaul will already be officially on the books.

Still, if Obama wants to actually preside over the expansion of coverage to more than 30 million people, he’ll first have to persuade a majority of Americans to re-elect him in 2012.

“For people who have the greatest need, a number of things will start quickly and make a difference,” said DeAnn Friedholm of Consumers Union. For others, 2014 may seem like a long way away. “Some people may be frustrated that it’s going to be several years, but that is the reality of what it takes to make these significant changes,” she added.

The main reason that Obama’s plan phases in slowly boils down to cost. The Medicare cuts and tax increases to finance the bill start early; the subsidies to help people purchase coverage come later. That combination keeps the cost of the overhaul under $1 trillion in its first decade, as Obama promised. Republicans call it an accounting gimmick – but in past years they also resorted to it.

Here’s a look at some of the major impacts for consumers:

COMING SOON:

Roughly a third of people in their 20s are uninsured, so allowing young adults to remain on their parents’ plans until 26 would be a significant new option for families.

Adult children would not be able to stay on a parental plan if they had access to employer coverage of their own. But they could get married and still be covered. (Grandkids, however, would not qualify.) Regulations will clarify to what degree young adults have to be financially dependent on their parents.

Other reforms starting this year would prevent insurers from canceling the policies of people who get sick, from denying coverage to children with medical problems, and from putting lifetime dollar limits on a policy.

These changes will spread risks more broadly, but they’re also likely to nudge insurance premiums somewhat higher.

Obama’s plan also includes an important new program for the most vulnerable: uninsured people who can’t get coverage because of major medical problems. It’s intended to provide an umbrella of protection until the broad expansion of coverage takes effect in 2014.

The government will pump money into high-risk insurance pools in the states, making coverage available for people in frail health who have been uninsured for at least six months. The premiums could still be a stretch, but for people who need continuing medical attention, it could make a dramatic difference.

“For people who have not been able to get anything, who have expensive chronic illnesses or other conditions, it could be a lifesaver,” said Friedholm.

There is a catch, however. The $5 billion Obama has allocated for the program is unlikely to last until 2014. In fact, government experts have projected it could run out next year.

Among seniors, the plan will create both winners and losers. On the plus side, it gradually closes the dreaded “doughnut hole” prescription coverage gap, improves preventive care and puts a new emphasis on trying to keep seniors struggling with chronic diseases in better overall health.

But it also cuts funding for popular private insurance plans offered through the Medicare Advantage program. About one-quarter of seniors have signed up for the plans, which generally offer lower out-of-pocket costs. That’s been possible because the government pays the plans about 13 percent more than it costs to cover seniors in traditional Medicare. As the payments are scaled back, it could trigger an exodus from Medicare Advantage.

“It’s not all black and white; sometimes it’s gray,” said James Firman, president of the National Council on the Aging. “Overall we think this plan is very good, and will provide some significant benefits for seniors. There will be some pain among some people in Medicare Advantage plans.”

The prescription coverage gap will be totally closed in 2020. At that point, seniors will be responsible for 25 percent of the cost of their medications until Medicare’s catastrophic coverage kicks in, dropping their copayments to 5 percent.

COMING LATER:

The real transformation of America’s health insurance system won’t take place until 2014.

Four breathtaking changes will happen simultaneously:

Insurers will be required to take all applicants. They won’t be able to turn down people in poor health, or charge them more.

States will set up new insurance supermarkets for small businesses and people buying their own coverage, pooling together to get the kind of purchasing clout government workers have now.

Most Americans will be required to carry health insurance, either through an employer, a government program or by buying their own. Those who refuse will face fines from the IRS.

Tax credits to help pay for premiums will start flowing to middle-class working families, and Medicaid will be expanded to cover more low income people. Households making up to four times the poverty level – about $88,000 for a family of four- will be eligible for assistance. But the most generous aid – including help with copayments and deductibles – will be for those on the lower-to-middle rungs of the income scale.

When all is said and done, the majority of working-age Americans and their families will still have employer-sponsored coverage, as they do now. But the number of uninsured will drop by more than half. Illegal immigrants would account for more than one-third of the remaining 23 million people without coverage.

Cost could be the Achilles’ heel of the whole effort.

“I hope it is not repealed, because we do need to extend coverage to most of our population,” said Gail Wilensky, who ran Medicare for President George H.W. Bush and remains a leading health care adviser to Republicans. “But it could well be substantially modified. It expands coverage, but it does very little to take on two other major issues: improving quality and leveling the rate of growth in spending.”